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German economy seen growing despite decline in June exports, industrial output

August 8, 2017 – Europe’s largest economy is likely to continue to grow at a robust pace, despite some recent weak data points, economists say.

The comments come after two consecutive days of potentially worrying data showed a decline in both exports and industrial output. Germany’s trade surplus widened slightly in June, though both imports and exports declined, data from the country’s statistics office showed Tuesday. The data come one day after Germany’s Economics Ministry reported that industrial output fell by 1.1% on the month, the index’s first decline since December.

But this isn’t a cause for concern, say observers. “We don’t think that the German economy has suddenly passed its peak. Instead, strong confidence indicators point to a continuation of the recovery,” said ING economist Carsten Brzeski. “Also, some kind of investment boost after the German elections combined with the gradual recovery of private investment already this year should extend an already mature business cycle of the German economy well into 2018,” he added.

Germany is set to go to the polls to elect a new parliament on Sept. 24 and German chancellor Angela Merkel’s center-right bloc is expected to win, but will likely have to form a coalition with at least one other party.

The election is taking place at a time of strong economic growth and very low unemployment. The German economy grew by 0.6% in quarterly terms in the first three months of the year and some economists forecast that the country outperformed in the second quarter. The Munich-based Ifo Institute said Tuesday it expects the German economy to have grown by 0.8% on the quarter in the second quarter. Official data are set to be released next week.

According to data adjusted for seasonal and calendar effects, exports from Germany declined by 2.8% on the month in June. It was the first decline in exports this year, after five straight months of positive gains.

Imports fell, however, at a steeper pace of 4.5%. The adjusted trade surplus stood at €21.2 billion ($25 billion), just above the €20.3 billion recorded in the previous month. The June figure was slightly below the €21.4 billion expected in a Wall Street Journal survey of economists last week.

The broader current-account surplus stood at €23.6 billion in June after €16 billion in the previous month. Polled economists had expected this surplus to be €24.2 billion.